21Dec

Treatment of Domestic Politically Exposed Persons under the Money Laundering Regulations

21st December 2023 Chris Biggs 163

On 14 December 2023, the UK Government laid The Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (SI 2023/1371) (“Amendment Regulations”) before Parliament. The Amendment Regulations will amend The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLRs”), to address the treatment of Politically Exposed Persons (“PEPs”) who are entrusted with prominent public functions by the UK (“Domestic PEPs”).

Amendments to the MLRs

The Amendment Regulations will introduce a requirement in the new paragraph 3A of Regulation 35 of the MLRs, stating:

“For the purpose of the relevant person’s assessment under paragraph (3), where a customer or potential customer is a domestic PEP, or a family member or a known close associate of a domestic PEP—

a) the starting point for the assessment is that the customer or potential customer presents a lower level of risk than a non-domestic PEP, and

b) if no enhanced risk factors are present, the extent of enhanced customer due diligence measures to be applied in relation to that customer or potential customer is less than the extent to be applied in the case of a non-domestic PEP.”

Regulation 35 will also be amended to include definitions for ‘domestic PEP’, ‘non-domestic PEP’ and ‘enhanced risk factors’, the latter of which means “risk factors other than the customer’s or potential customer’s position as a domestic PEP or as a family member or a known close associate of that domestic PEP.”

In a statement to the House of Lords, Baroness Vere of Norbiton, the Treasury Lords Minister, reiterated that domestic PEPs, or a family member or known close associate of a domestic PEP, must be treated as “inherently lower risk” than non-domestic PEPs by banks and other regulated firms. Baroness Vere further specified that the Government is making this change “to ensure that banks and other regulated firms take a proportionate and risk-based approach to the treatment of domestic PEPs”, which aligns with the Government’s approach to combating money laundering (“ML”) and terrorist financing (“TF”).

The Amendment Regulations will come into force on 10 January 2024.

Takeaway points for Casino Licensees

As a class of ‘relevant person’ listed under the MLRs, holders of a casino operating licence issued by the Gambling Commission (“Casino Licensees”) must comply with the MLRs.

Casino Licensees must therefore review and update their policies, procedures and ML/TF risk assessments to ensure they take into account the Amendment Regulations.

Please get in contact with us if you require assistance with reviewing your ML/TF risk assessment and/or your AML policies, procedures and controls.

21Dec

DCMS Committee on gambling regulation publishes its report

21st December 2023 Francesca Burnett-Hall 168

The Department for Culture, Media and Sport (“DCMS”) Committee on gambling regulation, appointed by the House of Commons, has today published its report with its conclusions and recommendations to Government.

The inquiry launched in December 2022, at a time when there was considerable uncertainty about the status of the Gambling White Paper. The original terms of reference were as follows:

What is the scale of gambling-related harm in the UK?
What should the key priorities be in the gambling White Paper?
How broadly should the term ‘gambling’ be drawn?
Is it possible for a regulator to stay abreast of innovation in the online sphere?
What additional problems arise when online gambling companies are based outside UK jurisdiction?

After the publication of the White Paper, on 27 April 2023, the terms of reference were broadened to include:

What are the most welcome proposals in the Gambling White Paper?
Are there any significant gaps in the Government’s reforms?
What are the potential barriers to the Government and Gambling Commission delivering the White Paper’s main measure by summer 2024, the Government’s stated aim?

Culture Media and Sport, Chair, Dame Caroline Dinenage MP, said:

“While gambling regulation should not overly impinge on the freedom to enjoy what is a problem-free pastime for the majority, more should be done to shield both children and people who have experienced problem gambling from what often seems like a bombardment of advertising branding at football and other sporting events. The Government needs to go further than the proposals in the White Paper and work with sports governing bodies on cutting the sheer volume of betting adverts people are being exposed to.”

The Committee received more than 160 submissions and held four oral evidence sessions.

Main conclusions and recommendations:

Implementation of the Gambling White Paper

The Government must set out a detailed timetable for the delivery of the White Paper’s proposals, with the Committee concerned that there was no mention of gambling legislation in the King’s Speech.
The Government and Gambling Commission should set out how they will address the growing trend of unlicensed gambling sites targeting the self-excluded. The Gambling Commission must also continue to work to improve its knowledge of the black market and its ability to monitor the number of British consumers gambling with illegal operators.

Online gambling protections

The Committee supports the principle of financial risk checks, but they must be minimally intrusive with customers’ financial data properly protected. There should be a pilot of the new system before the checks are fully implemented.
Stake limits for online slots should match those for electronic gaming machines in land-based venues and not exceed £5. Online deposit limits should be set by default and require customers to opt out rather than opt in.

Children and young adults

The Government should review the case for banning children’s access to social casino games, which are often playable on smartphones and simulate gambling activities and products.
The Committee supports the proposed enhanced online gambling protections for young adults aged 18-24, namely triggering a financial risk check at a lower monetary loss threshold and limiting the stake for online slots to £2. The Government, Gambling Commission, and gambling operators must ensure these measures do not unintentionally lead to more adults in this age group giving a higher age at account-creation.

Gambling advertising

There is an urgent need to better understand the effects of gambling advertising on the risk of harm. The evidence for a link between advertising and gambling harm currently appears much stronger than evidence indicating there is a risk of displacement to the black market if gambling advertising were restricted. The Government must commission research on the link between gambling advertising and the risk of gambling harm, including specifically for women and children.
The Government should have taken a more precautionary approach to gambling advertising in general – particularly to minimise children’s exposure. While a complete ban on gambling advertising would not be appropriate, there is still scope for further regulation beyond that proposed by the Government.
The Government should work with the Premier League and the governing bodies of other sports to ensure that the gambling sponsorship code of conduct contains provision to reduce the volume of gambling adverts in stadia. A higher proportion of gambling advertising in stadia should be dedicated to safer gambling messaging. The Government must require sports governing bodies to publish the code without further undue delay.

Land-based gambling

Customers who prefer to pay on electronic gaming machines using cash should continue to be able to do so on all machines following any introduction of cashless payments.
The Government must ensure that the new settlement arising from the review of the Horserace Betting Levy mitigates the impact of the White Paper’s reforms on the racing industry and ensuring British racing’s future.

Gambling research, prevention and treatment

The Committee supports the proposed structure and governance of the new statutory levy to be imposed on operators in the industry to fund gambling research, prevention and treatment. The Government must ensure that service providers currently operating via the voluntary funding system are adequately supported in the transition to a statutory levy. There should be a new national strategy for reducing gambling harms.

A Gambling Ombudsman

The scope of the new gambling ombudsman should include all disputes between gambling operators and their customers, not only those relating to social responsibility failings.

Government has two months to respond.

Please get in touch if you would like discuss any of the proposals in the White Paper or would like any assistance preparing a response to the Gambling Commission’s current open consultations: the Autumn consultation, which includes proposals relating to incentives, customer-led tools, customer funds protection and regulatory returns reporting (closing 21 February 2024) and the December consultation on proposals relating to financial penalties and financial key event reporting (currently closing 15 March 2024).

20Dec

DCMS publishes Gambling Commission Framework Document

20th December 2023 Ting Fung 165

Further to its consideration of the Gambling Commission’s powers and resources in the White Paper, the Department for Culture, Media & Sport (“DCMS”) published the Gambling Commission Framework Document (the “Policy Paper”) on 11 December 2023.

The Policy Paper, which has been agreed between DCMS and the Gambling Commission and approved by HM Treasury, sets out the broad governance framework within which DCMS will work with the Gambling Commission to provide:

“an effective environment for the Commission to achieve its statutory objectives through the promotion of partnership and trust.”

The Policy Paper updates the previous version of the corporate governance framework, which was published on 29 October 2021.

What are the Gambling Commission’s statutory objectives?

As a reminder, the Gambling Commission’s key statutory duty, as set out in the Gambling Act 2005, is to permit gambling insofar as it thinks is reasonably consistent with the licensing objectives of:

a) preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime;

b) ensuring that gambling is conducted in a fair and open way; and

c) protecting children and other vulnerable people from being harmed or exploited by gambling.

In addition, the Gambling Commission is responsible for regulating the National Lottery by virtue of the National Lottery etc Act 1993. In this regard, the Gambling Commission’s objectives are to manage the National Lottery in a manner most likely to secure:

a) that the interests of all participants are protected;

b) that the Lottery is run with all due propriety; and

c) that, subject to the objectives above, returns to good causes are maximised.

What does the Policy Paper do?

The Policy Paper sets out the manner in which DCMS and the Gambling Commission will work together to provide an effective environment for the Gambling Commission to achieve its statutory objectives.

The Policy Paper “does not convey any legal powers or responsibilities”. Instead, it provides a framework of good corporate governance practice and applicable regulatory requirements and expectations that accords with principles set out in the Treasury’s handbook, Managing Public Money (“MPM”), and within which both parties have agreed to operate.

Broadly, this means that the Policy Paper sets out the Gambling Commission’s core responsibilities, describes the governance and accountability framework that applies between the roles of DCMS and the Gambling Commission, and sets out how the day-to-day relationship works in practice, including in relation to governance and financial matters.

What does the Policy Paper say?

Some of the more notable aspects of the Policy Paper include:

In accordance with MPM Annex 3.1 a requirement for the Gambling Commission to provide “an account of corporate governance in its annual governance statement” including an assessment of its compliance with the Corporate Governance in Central Government Departments Code of Good Practice, with explanations of any material departures.
A requirement for Gambling Commission officials to liaise regularly with officials in DCMS’ Gambling Commission sponsorship team, DCMS’ primary contact with the Gambling Commission, to review performance against plans, achievement against targets and expenditure. This relationship, in turn, is overseen by the Deputy Director for Gambling and Lotteries.
Annual submission by the Gambling Commission of a draft corporate plan considering the following key matters in the year ahead:
- key objectives and associated key performance targets for the forward years, and the strategy for achieving those objectives;
- key non-financial performance targets;
- a review of performance in the preceding financial year, together with comparable outturns for the previous 2-5 years, and an estimate of performance in the current year;
- alternative scenarios and an assessment of the risk factors that may significantly affect the execution of the plan but that cannot be accurately forecast; and
- other matters as agreed between the department and the Gambling Commission.
The first year of the corporate plan will form the basis of the Gambling Commission’s business plan, which shall then be updated annually regarding key targets and milestones for the year immediately ahead. DCMS will also use the draft corporate plan to allocate the Gambling Commission’s annual budget and send this to the Gambling Commission by May/June each year.
A requirement for the Gambling Commission to publish an annual report of its activities, with the draft submitted to DCMS at least two weeks before the proposed publication date. The annual report must:
- cover any corporate, subsidiary or joint ventures under the Gambling Commission’s control;
- comply with the Treasury’s Financial Reporting Manual; and
- outline the Gambling Commission’s main activities and performance during the previous financial year and summary form forward plans.
In addition, the annual report must include the Gambling Commission’s finalised (audited) accounts. However, these will need to be provided to DCMS by May/early June each year so that they may be consolidated within DCMS, laid in Parliament and made available on the Gambling Commission’s website.
Formal performance review by DCMS four times a year.
Annual meeting between the Responsible Gambling Minister and Gambling Commission Chair as well as annual review of the Chair’s performance by DCMS.
Annual meeting between the Principal Accounting Officer (the Permanent Secretary of the department) and Gambling Commission Chief Executive (who is also the Accounting Officer responsible for safeguarding public funds and ensuring that the Gambling Commission is being run according to the MPM standards regarding governance, decision making and financial management).
A requirement for the Gambling Commission to provide information to DCMS monthly (at a minimum) to enable DCMS to satisfactorily monitor the Gambling Commission, including but not limited to its cash management.
Internal audits to be conducted (according to the Public Sector Internal Audit Standards, as adopted by HM Treasury) and reviewed by DCMS’ sponsorship department.

In addition, the Gambling Commission’s agrees to comply with the guidance set out at Annex A of the Policy Paper in areas of corporate governance, financial management and reporting, management of risk, commercial management, public appointments, staff and remuneration, and other general guidance.

Gambling Commission Fees

Notably, in relation to Gambling Commission fees (a topic upon which DCMS is expected to consult next year), the Policy Paper confirms that review of Gambling Commission fees remains at the discretion of the Secretary of State, to be exercised in accordance with MPM principles. Nevertheless, the Policy Paper confirms that the:

“Gambling Commission and DCMS will carry out an annual health check to determine whether fee levels remain appropriate or whether a further comprehensive review is required”.

The annual health check will consider:

any significant changes to legislation or the number/complexity of regulated operators;
levels of inflation;
efficiency savings made by the Gambling Commission; and
whether changes to industry structures or patterns of risk have significantly altered the focus of the Gambling Commission’s regulatory effort.

DCMS can bring the annual health check forward or initiate a comprehensive review of fees if it is clear this is required. Otherwise, the outcome of the annual health check will be recorded and signed off by the Director of Finance or the Head of Gambling and Lotteries in DCMS and by the Chief Executive or Chief Operating Officer of the Gambling Commission.

Next steps

The Policy Paper confirms that it should be reviewed and updated at least triennially unless there are exceptional reasons. However it goes on to state that the latest date for the next review and update is 1 September 2025, just under two years from now.

Given the amount of work on both DCMS and the Gambling Commission’s respective “plates” at the moment – with many of the reforms in the White Paper yet to be implemented – DCMS and the Gambling Commission will likely be pleased that the Policy Paper has now been agreed and that they can both take positive steps to progress other matters.

Please let us know if you have any questions or wish to discuss.

For further details on the Policy Paper, see the DCMS’ website.

18Dec

“Naughty or Nice?” – the Gambling Commission publishes its latest consultation on financial penalties and financial key event reporting

18th December 2023 Ting Fung 160

Between August 2021 and July 2023, Gambling Commission licensees paid around £38 million in financial penalties to HM Treasury’s consolidated fund and £44 million in lieu of a financial penalty via the regulatory settlement process.

After continued calls for clarification on the calculation of and challenges to its financial penalties, the Gambling Commission published its 2023 Consultation on proposed changes related to financial penalties and financial key event reporting (the “Consultation”) on 15 December 2023. The Consultation also addresses updates to the licence conditions and codes of practice (“LCCP”) in relation to financial key event reporting.

We set out below a summary of the key changes proposed in the Consultation.

Enforcement – financial penalties quantum

Aim?

The Gambling Commission’s intention is to:

“ensure a consistent process for the determination and imposition of financial penalties… provide greater transparency and clarity over how financial penalties are calculated … allow a sufficient scope to exercise necessary judgment in the determination of the quantum based on individual case characteristics, and to mitigate the risk of legal challenges on our approach.”

The Gambling Commission hopes that greater transparency and clarity for licensees will streamline its enforcement process by reducing protracted correspondence between licensees and the Gambling Commission, which will also help take the pressure off the two-year limit it has for imposing a financial penalty.

How will penalties be calculated?

The Gambling Commission proposes to update its Statement of Principles for Determining Financial Penalties to introduce a more clearly defined six-step process (new wording in bold and italics):

Calculate the disgorgement element of the penalty (if appropriate) ~~to reflect any financial detriment suffered by consumers and/or remove the financial gain to the Licensee, if possible~~.
~~Consider the seriousness of the breach to determine the appropriate~~ Determine the starting point for the penal element of the fine, in most cases by reference to seriousness and a percentage of GGY for the relevant breach period.
Consider aggravating and mitigating factors which may increase or decrease the penal element.
Consider the need for a deterrence uplift to the penal element~~, having regard to the principle that non-compliance should be more costly than compliance and that enforcement should deliver strong deterrence against future non-compliance~~.
Consider a any discount ~~to the penal element where early resolution has been reached~~ for early resolution.
Consider ~~whether an~~ any adjustment ~~should be made to ensure the sum of the figures at steps 1 (if calculated) and step 5 are reasonable and proportionate in respect of~~ for affordability and proportionality.

Financial penalties calculations will primarily be based on a proportion of the licensee’s GGY and will be based on the “level of seriousness” of the breach, with an escalating five-level scale starting at 0% to 0.99% for a level 1 breach (for example, one-off breaches) up to 10-15% of GGY for a level 5 breach, representing “a very serious threat to the licensing objectives”. Higher penalties may be imposed in “exceptional circumstances”, including using a non-GGY approach where more appropriate.

In line with the proposed updated six-step process, these baseline calculations would be subject to the adjustments set out at 3-6 above.

Financial key event reporting – scrutiny of investor source of funds

Aim?

The proposed changes to the LCCP are designed:

“to take account of the increase in complexity of mergers and acquisitions, and the increased globalisation of gambling.”

Key updates?

The current reporting threshold under licence condition 15.2.1(2) of the LCCP (reporting key events) regarding investors will be raised from 3% to 5% to align with requirements in other global jurisdictions.

The Gambling Commission is also proposing to expand reporting requirements regarding ‘relevant persons’ “significantly, but proportionately” to include “partnerships, trusts, charities and investment funds” which have “both direct and indirect interests in the gambling licensee of 5% or more”.

A new requirement will also necessitate disclosure of:

individuals who acquire the equivalent of £50,000 or more worth of new shares in a rolling twelve-month period; and
entities that acquire the equivalent of £1 million of new shares in a rolling 12-month period.

The Gambling Commission has indicated in the Consultation that:

“Given that this proposed new key event is focused on the raising of investment by the gambling licensee by issuing new shares, our expectation is that the source of funds evidence is gathered upfront as part of the share issuing process and should be reportable in the normal key event reporting timeframe.”

As such, this disclosure will include not only the identity of the investor and the value of the acquisition, it will also require the provision of evidence of the source of funds for the investment.

What’s next?

The Consultation is expected to close on 15 March 2024.

Subject to the actual changes to be made by the Gambling Commission, which it will outline when it publishes its response to the Consultation in due course, licensees can expect one or more versions of the following documents to be published in the next year:

We will be providing further insight on the proposals in the Consultation in upcoming blogs. In the meantime, please see David Whyte’s previous pre-emptive article, White Paper Series: The Gambling Commission’s powers – more to come?

We thoroughly encourage all licensees to respond to the Consultation.

Please get in touch if you have any questions or would like any assistance drafting your response.

12Dec

Gambling Commission releases its updated risk assessment of money laundering and terrorist financing in the British gambling market

12th December 2023 Chris Biggs 176

On 30 November 2023, the Gambling Commission published its updated money laundering and terrorist financing risk assessment for the British gambling industry in 2023 (the “ML/TF Risk Assessment”). The release of the updated ML/TF Risk Assessment has been a long time coming: the Gambling Commission had not updated its ML/TF Risk Assessment since December 2020.

The Gambling Commission sets out that the purpose of the ML/TF Risk Assessment:

“…is to:

provide a resource for the industry in informing their own ML and TF risk assessments
provide the Commission’s support to HM Treasury’s National Risk Assessment
inform and prioritise licensing, compliance, and enforcement activity to raise standards in the industry and meet duties under …”

Key points of note are:

The Gambling Commission reminds casino licensees to consider their obligations in the light of the update to the Regulations in September 2022 which requires those businesses to identify, assess, understand and mitigate the risk of proliferation financing.

The overall risk rating for each gambling sector has not changed since the Gambling Commission’s previous risk assessment from 2020 (the “2020 ML/TF Risk Assessment”).

The methodology applied by the Gambling Commission to assess the risks in the British gambling industry has been developed from its 2020 ML/TF Risk Assessment and it therefore recommends that the ML/TF Risk Assessment is read in conjunction with the 2020 ML/TF Risk Assessment.

Licensee requirements

Licence Condition (“LC”) 12.1.1 of the Licence Conditions and Codes of Practice requires that all operating licence holders (with the exception of gaming machine technical and gambling software licences):

conduct a risk assessment addressing “the risks of their business being used for money laundering and terrorist financing”;

following the completion of that risk assessment, ensure they have “appropriate policies, procedures and controls to prevent money laundering and terrorist financing”; and

ensure that their policies, procedures and controls for the prevention of money laundering and terrorist financing are “implemented effectively, kept under review, revised appropriately to ensure that they remain effective, and take into account any applicable learning or guidelines published by the Gambling Commission from time to time”.

Licensees must therefore ensure that they review the ML/TF Risk Assessment in detail, with a view to:

reviewing and refining (as applicable) their own money laundering and terrorist financing risk assessment in the light of the ML/TF Risk Assessment; and

updating their policies, procedures and controls to take into account any changes made to their risk assessment.

Please get in contact with us if you require assistance with reviewing your money laundering and terrorist financing risk assessment and/or your AML policies, procedures and controls.

06Dec

Andrew Rhodes’ speech at the CEO Briefing 2023: The beginning of a new chapter?

6th December 2023 Gemma Boore 164

The Chief Executive Officer of the Gambling Commission, Andrew Rhodes, delivered a speech on 8 November 2023 at the CEO Briefing 2023, an event organised by the Gambling Commission for C-level executives in the gambling industry to discuss progress with the implementation of the White Paper, share insights and explore current challenges.

This blog outlines the key themes from Rhodes’ speech, upon which we have been reflecting. It also highlights why, in our view, Rhodes is, by virtue of his plain-speaking leadership style at the Gambling Commission, making strides in improving the regulator’s relationship with its licensees, during an unprecedented period of change for the industry.

A more grown-up relationship

Rhodes opened the speech by reflecting on progress made since the Gambling Commission’s last CEO briefing (which we wrote about here). He acknowledged that the Gambling Commission “are seeing far less…extreme cases emerge from casework” in terms of player protection and commended operators and trade bodies for progress made. However, Rhodes made clear that more work has yet to be done:

“Last year I was clear that eliminating… …cases of extreme harm would lead to a new and – if anything – more challenging phase – how to tackle the more difficult issues where the balance between the licencing objectives and legitimate innovation, consumer choice and fair business practice is harder to define…

And all of that comes together in how we want the relationship between us, as the regulator, and you, as operators, to be if we want to continue to keep pace on the progress we have made over the last 12 months. A much more grown-up relationship where we can be transparent about the issues that matter and collaborative in how to address them.“

This message will be music to the ears of many because, for seemingly as long as anyone can remember, licensees have been complaining of being unable to engage constructively with the Gambling Commission. If Rhodes can deliver on his promise of creating a more communicative and collaborative relationship between regulator and regulated, this can only be good for the industry and regulator alike.

It is very positive that this message is being delivered from the top-down. However, as we all know, even a well-led organisation is only as good as those on the ground and to truly deliver on his promise of cultivating a more “grown up relationship“, Rhodes will need to ensure that his message filters through the Gambling Commission’s licensing, compliance and enforcement divisions, with which the industry interact, with varying degrees of cordiality, on a daily basis.

Praise where praise is due

Rhodes went on to reflect on the core messages he delivered at his speech at the 2022 CEO Briefing, noting that “last year I said we are still seeing too many of the extreme cases – the top of the chart – and that this was holding us back from grappling with those more complicated and harder to solve challenges”.

This year, the message to licensees was much more positive and represented a somewhat rare ‘pat on the back’ from the Gambling Commission:

“Now I’m not going to say everything is perfect now, but twelve months on we are seeing far less of those extreme cases emerge from our casework. The industry has made progress and I want to thank the many operators in the room today and your trade bodies for having worked with the Commission to achieve this step forward.“

Rhodes went on to note that the reduction in extreme casework will allow the Gambling Commission to start considering more complex issues. He hinted that this could involve the regulator gaining a better understanding of the issues faced by different types and sizes of operators, so it can better regulate a diverse industry with a dynamic customer base; and understand how technology can be used to “reduce reliance on manual processes” – even though human judgement will always be needed in some instances.

A more collaborative approach to tackling the illegal market

Rhodes also touched on the work the Gambling Commission has been doing to tackle the illegal, unlicensed gambling market in Great Britain. This is a topic on which we have extensively written (please see our recent blog here for example, which provides a checklist for licensees who find themselves contacted by the Gambling Commission regarding the use of their software or placement of ads by black market operators), so we will not repeat ourselves; but two statements made by Rhodes in the CEO Briefing are worth emphasising.

First, Rhodes noted in his introduction to this topic that he has often been misquoted regarding the risk of illegal gambling in Great Britain (which, as regular readers of other gambling publications will know, is quite true), and helpfully clarified that in his view (emphasis added):

“The risk of illegal gambling and the black market as an argument against reform of regulation is, I think, overstated, based on what we see in reality… …That does not mean there is no risk, as I have said many times. It does not mean there are no problems…“

Secondly, Rhodes explained that the Gambling Commission is hopeful it will soon begin seconding people from the industry to boost its insight and expertise in relation to tackling illegal, unlicensed gambling. Again, this will be a welcome message for the industry, who have long felt that they have much to offer to help the Gambling Commission to carry out its functions in this important area – another indication that Rhodes will continue, during his tenure at the Gambling Commission, to do more to improve collaboration with industry stakeholders.

High growth operators to be under the spotlight

Rhodes also hinted in his speech that in the forthcoming year, the Gambling Commission will be focusing its attention on a slightly different category of licensee. Specifically, he explained that the Gambling Commission will be turning its sights to Tier 2 and Tier 3 operators, “particularly where they have grown rapidly”.

This is not because they see growth as a “bad thing” – but because it may be an indication that the business may be growing faster than the underpinning compliance infrastructure.

This is a valid observation and operators that fall into this category will be well-advised (if they have not done so already) to commence a review of their internal policies and procedures to ensure they continue to be both:

fit for the business given its changing size, nature and/or customers; and

regularly updated to reflect recent changes to the Licence Conditions and Codes of Practice and associated guidance; for example, in relation to remote customer interaction, a subject upon which we have extensively written – most recently, here.

To be or not to be bound by the Regulators’ Code?

Perhaps the most controversial section of Rhodes’ speech concerned his nod to the Regulators’ Code – and more specifically, his indication that the Gambling Commission does not consider itself to need to strictly adhere to these standards, which are intended to provide a “principles-based framework for regulatory delivery that supports and enables regulators to design their service and enforcement policies in a manner that best suits the needs of businesses and other regulated entities”.

In broaching the subject, Rhodes referred to “questions about the Gambling Commission’s adherence to the Regulators’ Code” (explored in some of our previous blogs, including this article), and went on, somewhat dismissively, to refer to the Regulator’s Code as “a seven page document written some years ago” that contains:

“a number of very sensible guiding principles for regulators, but it is meant to be just that – a sensible set of guiding principles – it does not try to cover the exact application of regulation in all circumstances.”

Rhodes went on to give some context to this statement by highlighting that the Gambling Commission’s role in regulating the gambling industry is to find an appropriate balance. For example, to find a balance between complying with its duty to aim to permit gambling, and consistency with the licensing objectives. Or, in terms of balancing the interests of the 22.5 million people that gamble in this country every year (44% of the adult population) with the risk that some of that cohort will experience harms from gambling.

Although we agree that the Regulator’s Code is a set of guiding principles which requires the Gambling Commission to “choose proportionate approaches” to those it regulates based on “business size and capacity”, “minimis negative economic impacts of their regulatory activities”, it is much more than that and we suspect that this part of Rhodes’ speech is likely to stimulate future debate.

No one can reasonably argue that the man at the helm of the Gambling Commission does not have a difficult job, and Rhodes appears to be balancing the issues with which he is faced with gumption. However, it is clear that regulators such as the Gambling Commission must have regard to the Regulator’s Code when developing policies and operational procedures that guide their activities. This is not so dissimilar from the obligation the Gambling Commission imposes upon its licensees to have regard to the Gambling Commission’s formal guidance and advice under the Licence Conditions and Codes of Practice. If the Gambling Commission expects the industry to properly take into account its own guidance, surely it must practise what it preaches.

Swallowing a bitter pill

Next, Rhodes addressed the elephant in the room – the recent high-profile discussions regarding the introduction of financial risk and vulnerability checks and how these would impact the British horseracing industry.

Labelling it as “an exceptionally difficult and sometimes very bitter debate”, Rhodes disclosed that he has spent a lot of time meeting with and speaking to senior leaders in horseracing and groups representing punters. Despite this, Rhodes’ message was that it is not the job of the Gambling Commission to “consider or advise on the wider implications for any given sport – that is the role of the ”.

Rhodes went on to draw comparisons between the relationship between gambling and football vis a vis horseracing, commenting that many would “probably agree football would still happen even if people could not gamble on it”, but horseracing:

“is unique in its relationship with gambling and has a critical dependency on gambling as a funding stream. If less people lose money betting on horseracing, the income into horseracing goes down.”

Despite this, Rhodes brought attention to the Patterns of Play research, which showed that out of the accounts used for horseracing bets, “the most profitable 1 percent from the operators’ perspective accounted for 70.4 percent of Gross Gambling Yield” – that 1% being a proportion five times smaller than the equivalent percentage for other types of sports betting; and that operators needed to take this into account when determining the financial thresholds to apply when assessing the risk of different customers’ spend.

Rhodes effectively therefore poured cold water on a campaign by the horseracing industry that there should be no checks at all on how affordable someone’s gambling is in horseracing. For example, in the recent petition presented to UK Government that has (as at the time of writing) accumulated 102,806 signatures (more than the 100,000 signatures needed to be considered for debate in Parliament), and which has recently attracted the following response from the UK Government:

“We are committed to a proportionate, frictionless system of financial risk checks, to protect those at risk of harm without over regulating….

….this petition raises the important link between betting and horseracing. The government recognises the enormous value of horseracing as both a spectator sport and through its economic contribution. The white paper’s estimate was that financial risk checks will reduce online horserace betting yield by 6% to 11%, which would in turn reduce racing’s income by £8.4 to £14.9 million per year (0.5% to 1% of its total income) through a reduction in levy, media rights and sponsorship returns.”

Rhodes’ comments and the Governmental response therefore confirm – perhaps to the dismay of signatories of this petition – that both the Gambling Commission and the Secretary of State are committed to rolling out financial risk checks – but that these will only be tested, trialled and rolled out when the Government and Gambling Commission are confident the checks “will be frictionless for the vast majority of customers”.

How precisely this will be achieved is a thorny issue. It is not yet clear what is meant by the phrases ‘frictionless’ or ‘vast majority’ and the interpretation of these words will be critical to ensuring that financial risk checks do not have unintended consequences for the gambling industry in Great Britain. We truly hope that the Government and Gambling Commission identify some innovative solutions by the time the Gambling Commission’s response to its Summer 2023 consultation (which considered how financial vulnerability and financial risk checks would be implemented) is published in 2024.

Future developments

In concluding his speech, Rhodes highlighted two forthcoming developments:

the Gambling Commission’s new three-year Corporate Strategy (due to be published next Spring), where they are “baking into it a focus on communicating clearly and building effective partnerships” which “will include engaging constructively with industry”, with a view to “reduc the reliance on formal enforcement”; and

a one-day conference hosted by the Gambling Commission during which, similar to an event hosted in 2023, the Gambling Commission will invite collaboration with operators, academics and the third sector to discuss how to improve the evidence base in gambling and tackle the illegal market. The next conference in this series is scheduled for March 2024.

Finally, Rhodes reiterated the key message in his speech by calling on the industry to “commit to working together” as it will “lead to a better regulation, better outcomes and safer, fairer and crime free gambling across Great Britain”.

Our thoughts

Rhodes’ comments in the CEO Briefing, as well as his general approach since he has been appointed as Chief Executive Officer of the Gambling Commission, are encouraging and potentially signal the beginnings of a relationship between the Gambling Commission and its licensees. However, as they say: “the proof of the pudding is in the eating” and we will be closely watching to see whether Rhodes’ approach is reflected in the Gambling Commission’s work during 2024 – particularly in relation to its responses to the recently closed Summer 2023 consultation and recently opened Autumn 2023 consultation; and in its future enforcement action.

Next steps

If you would like to discuss Rhodes’ speech or any of the themes therein, please get in touch with your usual contact at Harris Hagan.

With credit and sincere thanks to John Hagan for his invaluable co-authorship

29Nov

Chambers Gaming Law 2023 Global Practice Guide

29th November 2023 Harris Hagan 174

We are pleased to announce that Bahar Alaeddini has reprised her role as Contributing Editor to the Chambers Global Practice Guide for Gaming Law 2023, and Jessica Wilson has again contributed as a co-author. The latest edition of the Gaming Law 2023 guide is now live and describes the licensing and regulatory regimes in 35 jurisdictions, including many of the major global jurisdictions.

In a year that saw a number of significant developments and regulatory updates in the UK and abroad, Gaming Law 2023 is a helpful guide to lawyers, gambling businesses and others in the industry. It provides the latest legal information on a range of topics, including: land-based and online gambling; B2C and B2B licences; application requirements; affiliates; white labels; responsible gambling; AML legislation; restrictions on advertising; acquisitions and changes of control; trends in social gaming, esports, fantasy sports and blockchain; and taxation.

Harris Hagan contributed to the following parts of the publication:

Key trends are covered by jurisdiction under the Trends and Developments section, and the practice guide also provides users with the opportunity to perform jurisdiction comparisons using the Compare locations tool.

Please use the above links to review our contributions and use the practice guide.

29Nov

Understanding the impact of increased cost of living on gambling behaviour: Gambling Commission’s interim findings

29th November 2023 Chris Biggs 181

Last month, the Gambling Commission published its interim findings on the impact of increased cost of living on gambling behaviour. The Gambling Commission’s research aims to improve its understanding of the impact of increased cost of living by examining the behaviours and motivations of gamblers during the period of high cost of living in Great Britain (“COL Research”).

The Gambling Commission commenced the COL Research in December 2022 in partnership with Yonder Consulting, and undertook a “mixed-methodology research approach” with a longitudinal survey taking place over three waves between December 2022 and June 2023. This was followed by qualitative depth interviews to further understand the impact of the rise in cost of living on lifestyle and gambling behaviours.

In this blog, we summarise the COL Research, set out the Gambling Commission’s interim findings and identify key points for licensees in Great Britain to note.

What is the COL Research?

The Gambling Commission sets out its definition of ‘cost of living’, as:

“the amount of money that is needed to cover basic expenses such as housing, food, taxes, healthcare, and a certain standard of living.”

The COL Research specifically aims to test three core hypotheses:

The rise in cost of living is likely to impact consumers’ gambling behaviour in different ways, depending on their personal circumstances and the way in which gambling fits into their lives.
Some gamblers will report that the rise in cost of living has had a mediating effect on their gambling behaviour.
The rise in cost of living may negatively impact vulnerabilities for some consumers, putting them at an increased risk of gambling-related harm.

The project commenced with three waves of quantitative research, which sought to: (1) initially establish a baseline of key gambling behaviours; (2) explore the impact of external triggers for gambling; and (3) subsequently track any changes to the core gambling behaviours.

Wave 1

Between 21 and 22 December 2022 the Gambling Commission commenced the nationally representative survey of 2,065 adults aged 18 or over. 973 participants (47%) had engaged in gambling activity in the last four weeks.

Wave 2

Between 27 February and 3 March 2023, 1,694 of the same sample group were recontacted to capture changes in the core gambling behaviours surveyed. 820 participants (48%) had engaged in gambling activity in the last four weeks.

Wave 3

Between 26 May and 2 June 2023, 1,391 of the same sample group (who all took part in Wave 2) were recontacted to capture further changes in the core gambling behaviours. 666 participants (48%) had engaged in gambling activity in the last four weeks.

Qualitative wave

The qualitative phase took place in August 2023, with the aim to build a “more rounded impression and picture of each individual”. This phase engaged with 16 individuals who each completed a three-day “digital diary pre-task” to reflect on spending habits. 16 one-hour online interviews were then conducted with gamblers who engage in a variety of different gambling types and with different gambling behaviours (whilst it is not clear, we assume these were the same 16 individuals who participated in the digital diary pre-task).

The Gambling Commission’s interim report does not discuss findings from the qualitative phase; these will accompany further quantitative and longitudinal analyses in the final report expected in “early 2024”.

Key findings

The quantitative phase of the COL Research (i.e. the three waves) surveyed the participants across three broad topics. We set out the Gambling Commission’s key findings for each topic below.

Topic 1: Financial comfort and concerns, and wellbeing

Just under half of the respondents indicated they were “just about managing but felt confident that they would be okay” with the cost of living, whereas between 40% and 43% of individuals indicated they were “financially comfortable”.

The subgroups most likely to have broader concerns about their personal finances are those who gamble online and those who score 8 or more on the Problem Gambling Severity Index (“PGSI”), however most individuals signalled the need to take steps to make their income go further during the tracked period.

In terms of wellbeing, between 45% and 49% of respondents reported “not being able to enjoy the things that they used to due to the rising cost of living” throughout the tracked period.

Topic 2: Changes in gambling behaviours

Despite the rise in cost of living, a clear majority of gamblers reported that their gambling behaviours (amount of time and money spent, number of gambling occasions and typical stake placed) had remained stable, the majority ranging from 62% to 75% depending on the type of gambling behaviour.

If a change in gambling behaviour was reported, it was much more likely to be a decrease in gambling. For example, between 22% and 26% of individuals reported a decrease in the amount of time spent gambling, compared to 6% to 7% that reported an increase in time spent gambling.

69% of individuals who did report changes indicated that these changes were “at least partially a direct consequence” of increases in the cost of living.

Individuals who scored 8 or more on the PGSI were more likely to report an increase in the gambling behaviours surveyed, despite the rise in cost of living.

Topic 3: Motivations for gambling

Respondents who previously indicated they had changed their gambling behaviours were asked questions about four specific motivations in Waves 1 and 3, displayed in the Gambling Commission’s Table 4.1:

Between 10% and 20% of online gamblers indicated that bolstering their finances was their motivation for gambling, and this motivation applied to “significantly more” individuals who scored 8 or more on the PGSI.

Interim conclusions

The concluding remarks in the Gambling Commission’s report considered the interim findings in the context of the following two hypotheses:

Has the rise in cost of living had a mediating effect on gambling behaviour?

Initial quantitative evidence does not suggest that the rise in cost of living has had a mediating effect on gambling behaviours. However, the “small proportion” of those who did make changes to their gambling during this period were more likely to have deceased their gambling; the exception being individuals who scored 8 or higher on the PGSI, who were more likely to have increased their gambling compared to other groups of participants.

Has the rise in cost of living negatively impacted vulnerabilities for some consumers?

A small minority of gamblers who said that they have changed at least one of the surveyed gambling behaviours reported using gambling to support their finances in some way, with a greater proportion of those doing so being online gamblers and/or those who scored 8 or more on the PGSI. The individuals who did change their gambling behaviours indicated that the rise of cost of living has at least partially contributed to their change in behaviour.

Takeaway points

It can be inferred from the interim findings that online gamblers and individuals scoring 8 or higher on the PGSI may be more vulnerable to gambling-related harms when faced with a rise in cost of living.

Given that the interim findings come at a time when the spotlight is on affordability and customer interaction, it will be interesting to see whether the COL Research findings feature prominently in the Gambling Commission’s response to its summer consultation that closed on 18 October 2023 and included consideration of new obligations on licensees to conduct financial vulnerability checks and financial risk assessments.

For the meantime, online operators in particular, should bear these interim findings in mind while they are updating their safer gambling policies and procedures to reflect the Gambling Commission’s revised customer interaction guidance for remote gambling licensees; and evaluate whether they ought to take increased cost of living into account in their assessment of financial risk – pending formal direction from the Gambling Commission.

The Gambling Commission’s final report in “early 2024” will combine its interim findings with further quantitative analysis of the longitudinal impact of the increased cost of living across different demographic groups, and key findings from its qualitative phase of the COL Research.

Please get in contact with us if you have any questions about the Gambling Commission’s interim findings and/or your business’ approach to customer interaction and financial vulnerability.

28Nov

Autumn Statement 2023: Upcoming consultation and tax implications for the gambling sector

28th November 2023 Adam Russell 165

On 22 November 2023, it was announced in the Treasury’s Autumn Statement 2023 (the “Statement”) that the Government will “shortly publish a consultation on proposals to bring remote gambling into a single tax rather than taxing it through a three tax structure as at present.”

This would represent a significant shift from the current position, whereby taxation of remote gambling (defined in the Statement as “gambling offered over the internet, telephone, TV and radio”) is through a three-tax structure consisting of remote gaming duty (21% of gross win), general betting duty (15% of gross win) and pool betting duty (15% of gross win).

When these proposals are considered alongside the impact of proposed Gambling Act reforms which include the proposed introduction of a statutory levy, there will likely be financial implications for remote gambling licensees. It is therefore vital that industry and its stakeholders are fully engaged with the Government’s consultation on single tax proposals to ensure that all potential consequences are considered.

Although the proposals do not impact the land-based sector, the Government also announced in the Statement that gross gambling yield bandings for gaming duty (payable by land-based casinos) will be frozen, again, until 31 March 2025. The Betting and Gaming Council has criticised this announcement stating that it will, in effect, mean that land-based casinos will see their tax bills increase because the bands are not being increased in line with inflation.

Next steps

We will blog further on this topic when the Government’s consultation has been published. Please get in touch with us if you have any questions or if we can assist.

24Nov

Gambling Survey of Great Britain: Gambling Commission’s new approach to collecting gambling participation and prevalence data

24th November 2023 Chris Biggs 166

In December 2020, the Gambling Commission launched a consultation on proposals to change the way it collects data about adult gambling participation and problem gambling prevalence. Since then, the Gambling Commission has been developing a “single, gold standard population survey for the whole of Great Britain”, in an effort to improve the quality, robustness and timeliness of its official statistics.

Following two years of pilot surveys, stakeholder engagement, interim findings reports and fieldwork conducted by the National Centre for Social Research (“NatCen”), an independent not-for-profit organisation and registered charity, and the University of Glasgow, on 23 November 2023, the Gambling Commission published the first “experimental” statistics of the Gambling Survey of Great Britain (“GSGB”). Thus begins the roll-out of, as the Gambling Commission’s CEO Andrew Rhodes recently described it in a two-part podcast discussion with The Gambling Files, the “largest survey in the world of its kind, on gambling behaviours, attitudes, participation”.

In this blog, we discuss the background to the GSGB, its current status in light of the recent announcement, and why the GSGB is such an important project for the gambling industry in Great Britain.

What is the GSGB?

Background

Prior to the Gambling Commission’s December 2020 consultation, the GSGB was foreshadowed in the Gambling Commission’s Business plan 2020-2021, where the Gambling Commission stated, in connection with its key strategic priority to prevent gambling harm to consumers and the public, it would “review approach to measuring participation and prevalence and publish conclusions”.

As noted above, the December 2020 consultation on gambling participation and problem gambling prevalence research was subsequently launched, which included proposals to change the Gambling Commission’s research methodology to, amongst other things, consolidate the different surveys the Gambling Commission previously relied upon to understand adult gambling participation and prevalence into one population survey, and improve the frequency and turnaround time of the survey data. The response to the consultation, when it was published, confirmed that respondents largely supported these proposals, with an average of two-thirds of respondents agreeing with the proposals to change the research methodology and only one-fifth of respondents disagreeing.

In the meantime, the Gambling Commission had been conducting quarterly telephone surveys on participation and prevalence of problem gambling (the most recent results of which were published on 11 May 2023). However, it was noted by the Government in the White Paper that the telephone survey was “less robust” than the national health surveys of Great Britain in its tracking of gambling trends, and that there are gaps in the evidence and the Government’s understanding of gambling participation and prevalence of harm. This criticism reflected conclusions we had also reached in our joint blog with Regulus Partners on the topic of in-play betting.

It was thus clear, from an industry, regulatory and Governmental perspective, that there was a need for the Gambling Commission to revamp its methodology for the collection of gambling data. In light of the release of the experimental figures, the Gambling Commission’s continued roll-out of the GSGB will be closely followed by the industry.

How is the GSGB carried out?

NatCen describes the GSGB as a survey that asks individuals for their “views on and experiences of playing different games, lotteries and betting, and the effects that these activities may or may not have on people’s lives.” It explains that the GSGB will provide the Gambling Commission with high-quality information about the gaming, betting and playing habits, attitudes and harms experienced across the adult population in Great Britain.

In terms of the specific methodology, the GSGB will be an annual “push to web” survey of up to two adults per household in Great Britain. The Gambling Commission hopes that the GSGB will collect responses from 20,000 individuals each year.

Procedure

NatCen explains that survey invitation letters have been sent to addresses selected at random from the Postcode Address File. In these invitations, NatCen asks that up to two adults in each household take part in the survey online by either:

scanning one of the QR codes provided in the survey invitation letter; or
visiting the webpage (survey.natcen.ac.uk/GSGB2) and entering one of the unique access codes provided in the survey invitation letter.

Participants will be asked a series of questions that should take approximately 20 minutes to complete. As a reward for taking part, those who complete the GSGB will receive a £10 shopping e-voucher.

Further information about the GSGB and the procedure can be found on NatCen’s website.

Timeline

The Gambling Commission has published a timeline tracking the progress of the GSGB since its December 2020 consultation. This displays the various stages of the Gambling Commission and NatCen’s progress, such as the consultation, stakeholder engagement, pilot testing and interim reporting on the GSGB project.

Release of experimental statistics

What are the findings?

The findings are (in the Gambling Commission’s words) “not yet fully developed and are still under evaluation”. In the Gambling Commission’s blog announcing the update, Helen Bryce, Head of Statistics at the Gambling Commission, explained that the findings are from the “final step in the experimental stage of the project”, and have been published so users (i.e. industry stakeholders) can familiarise themselves with the GSGB’s methods and findings before they become the Gambling Commission’s official statistics.

On our initial review, we note the experimental data was based on a sample group of approximately 4,000 (up to 3,774) respondents and presents some interesting key findings:

50% of respondents (of which 53% were male and 47% female) had gambled in the past 4 weeks, whereas 61% of respondents had gambled in the last 12 months.
The three most popular gambling activities in the past 4 weeks were the National Lottery (32%), charity lotteries (15%) and National lottery scratchcards (13%).
Most gambling respondents indicated they had gambled for the chance of winning big money (84%) and because it is fun (72%).
2.5% of respondents were considered to be problem gamblers, having scored 8 or higher on the Problem Gambling Severity Index (“PGSI”) screen, and a further 3.5% of respondents were considered moderate-risk gamblers (scoring between 3-7 on the PGSI screen).

Ms Bryce explained in the Gambling Commission’s blog, due to the significant changes in its methodology for collecting this data, these results should not be compared to previous figures sourced from its quarterly telephone surveys or NHS health surveys. Generally speaking this is a reasonable point of clarification to make, but it is made in a clear effort to dampen industry outcry to the alarming increase in the problem gambling rates: as at March 2023, the overall headline problem gambling rate (measured by the PGSI screen) was “statistically stable” at 0.3%.

The Gambling Commission has also set out its views on the strengths and limitations of the GSGB methodology. Notably, it has reiterated that although the experimental sample size was approximately 4,000 respondents, the Gambling Commission still expects to gather data from 20,000 respondents annually when it moves to the official statistics phase.

The findings, which are set out in an easily navigated spreadsheet, can be downloaded here. The Gambling Commission is also seeking industry feedback on the GSGB, which can be submitted through its online form.

Current status of the GSGB

The Gambling Commission has recruited Professor Patrick Sturgis, Professor of Quantitative Social Science at the London School of Economics, to undertake an independent review of the GSGB methodology. Professor Sturgis’ findings and recommendations will be published by the Gambling Commission “early next year”, with a view to the GSGB methodology becoming the Gambling Commission’s official statistics “later in 2024”.

The Gambling Commission’s previous update on the GSGB came in a blog from July this year. Having hosted panel workshops with three stakeholder engagement groups (academics, representatives from the gambling industry and individuals with lived experience), the Gambling Commission stated that it intended to publish the first set of quarterly official statistics in Spring 2024, alongside a timeline for future quarterly release dates. With the Gambling Commission seeking an independent review of the GSGB’s methodology, it now appears that the Gambling Commission will not adopt the results of the GSGB as its official statistics until later next year.

Why is the GSGB important?

The Gambling Commission has a duty to advise the Secretary of State on: (a) the incidence of gambling; (b) the manner in which gambling is carried on; (c) the effects of gambling; and (d) the regulation of gambling (see section 26(1) of the Gambling Act 2005).

NatCen explains that the information collected by the GSGB will help the Gambling Commission to fulfil this duty by being “written up in reports for policy makers to use in their decision-making process” so it may be used to “inform policy changes in the gaming, betting and playing industry”.

Furthermore, in its Evidence gaps and priorities 2023 to 2026, published on 23 May 2023, the Gambling Commission confirmed it would be using the GSGB to:

improve its understanding of gambling participation at a national level and in sub-groups of interest;
produce robust statistics on who is experiencing gambling-relating harms, and how; and
develop its understanding of how people commit crime or are a victim of crime as a dimension of gambling-related harm.

The quarterly statistics from the GSGB will thus underpin the Gambling Commission’s future decisions about how it can better protect consumers and carry out its regulatory duties.

Of note for online B2Cs, problem gambling prevalence statistics are also referenced in the Gambling Commission’s new remote customer interaction guidance (about which we have written previously). This guidance addresses, among other things, how remote licensees can comply with the requirement under social responsibility code provision 3.4.3(14) of the Licence Conditions and Codes of Practice to “take account of problem gambling rates for the relevant gambling activity as published by the Commission, in order to check whether the number of customer interactions is, at a minimum, in line with this level”, which came into effect from 12 September 2022.

Licensees should familiarise themselves with the experimental findings, as the Gambling Commission intends. It is, in effect, a warning: Licensees should understand how to interpret the findings of the GSGB and carefully consider these results for when they become the Gambling Commission’s official statistics. Licensees should use this data to inform the minimum levels of customer interactions they are making with customers – or risk enforcement action by the Gambling Commission for not complying with a condition of their operating licence.

Summary

Following criticism of its prior methods for collecting industry statistics, the Gambling Commission appears to be building a robust research methodology to ensure the GSGB will produce its gold standard population survey for the whole of Great Britain. The latest problem gambling rates collected by the GSGB (albeit ‘experimental’) have indeed attracted further scrutiny from the industry – some may argue that the Gambling Commission anticipated such scrutiny and pre-emptively commissioned Professor Sturgis’ independent review of the GSGB. Either way, we fully expect the Gambling Commission, in its future regulatory decisions, to place significant weight on the evidence drawn from the GSGB when it becomes the Gambling Commission’s official statistics.

With new customer interaction requirements for remote operators in Great Britain in effect, we recommend all licensees (and especially online B2Cs) review the experimental findings, stay apprised of the GSGB’s further progress and closely analyse the problem gambling data that is released in light of the number of interactions they are carrying out with customers, in preparation for the GSGB becoming the Gambling Commission’s official statistics next year. After all, we know the Gambling Commission will be doing the same in future compliance assessments.

Please get in touch with us if you have any questions about the GSGB and how its results should be used to inform your remote customer interaction policies and procedures.

In “push to web” surveys, respondents are recruited offline (such as via another survey, or through the post), and then encouraged to go online and complete a web questionnaire.

Gambling Regulation